Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd

CourtHigh Court (Singapore)
Date31 July 2013
Docket NumberSuit No 373 of 2012

High Court

Vinodh Coomaraswamy J

Suit No 373 of 2012

Aero-Gate Pte Ltd
Engen Marine Engineering Pte Ltd

Navinder Singh (Navin & Co LLP) for the plaintiff

Palaniappan Sundararaj and Ramesh Bharani (Straits Law Practice LLC) for the defendant.

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Contract—Discharge—Breach—Defendant failing to meet deadline for delivery of goods by reason of slow work progress—Whether plaintiff entitled to terminate contract—Whether plaintiff deprived of substantially whole benefit which it was intended it would obtain under contract

Contract—Waiver—Plaintiff treating contract as alive despite defendant's breach in failing to meet deadline for delivery of goods—Whether this constituted waiver of plaintiff's right to terminate contract arising from its having been deprived of substantially whole benefit it was intended it would obtain under contract

Personal Property—Ownership—Doctrine or principle of accession—Defendant transferring ownership of goods to plaintiff and subsequently attaching other component parts to those goods—Goods with attached component parts remaining in defendant's possession—Whether plaintiff entitled to delivery up of attached component parts in addition to delivery up of goods

Personal Property—Title—Transfer—Relativity of title—Defendant transferring ownership of goods to plaintiff and plaintiff subsequently transferring ownership to its own customer—Goods remaining in defendant's possession—Whether plaintiff entitled to order of delivery up against defendant notwithstanding transfer of ownership to plaintiff's customer

The plaintiff engaged the defendant to fabricate and deliver ten containerised diesel generators to the plaintiff under two purchase orders, in order that the plaintiff might then deliver these generators to its own customer. The nature and scope of the defendant's work under this engagement included the following. It had to procure Caterpillar generators and modify them. The modifications included replacing the standard factory-installed alternators with heavier-duty Leroy-Somer alternators to be delivered by the plaintiff. It had to design and fabricate containers to house the modified Caterpillar generators. It had to procure, or design and fabricate, other component systems and parts. It then had to put everything together into a final product by installing the modified Caterpillar generators and the component systems and parts into the containers.

Under the first purchase order (‘PO 1’), the defendant had to deliver four generators to the plaintiff by end-January 2012. Under the second purchase order (‘PO 2’), the defendant had to deliver six generators to the plaintiff: four by 1 November 2011, and a further two by 1 January 2012. The parties agreed that PO 2 would have the earlier delivery deadlines even though they had entered into PO 2 after PO 1. Accordingly, the defendant suspended entirely work under PO 1 while it carried out work under PO 2.

The defendant failed to meet its delivery deadlines under PO 2 but continued work even after the lapse of those deadlines. It delivered two completed generators to the plaintiff on 16 January 2012 but made no further deliveries thereafter. The plaintiff eventually terminated both PO 1 and PO 2 on 24 April 2012. At the time that the plaintiff did so, the defendant was still working on two generators. In addition, it had in its possession two Caterpillar generators which had not been worked on at all. These four generators had all been committed to the fulfilment of PO 2. No generators had been committed to the fulfilment of PO 1.

At some point in the course of the defendant's work under PO 2, the defendant signed a letter stating that it transferred to the plaintiff ownership of the six Caterpillar generators committed to PO 2, including the six factory-installed alternators in these Caterpillar generators. The plaintiff then proceeded to sign a letter purporting to transfer ownership of the same generators to its own customer.

The plaintiff put forward a number of claims against the defendant. These claims were of three kinds: first, a claim for return of 20% of the contract price under PO 1, which it paid pursuant to the payment schedule; second, claims for damages and other specific sums of money to remedy the defendant's breaches of contract in respect of PO 2; and third, a claim for delivery up of the generators and factory-installed alternators remaining in the defendant's possession. The defendant resisted the plaintiff's claims and, in turn, counterclaimed against the plaintiff damages for wrongful termination of PO 1 and PO 2 as well as for breach of a separate contract unrelated to the two purchase orders.

Held, allowing the plaintiff's claims and dismissing the defendant's counterclaims:

(1) In relation to PO 1, the defendant was in breach of contract because it failed to meet the 31 January 2012 deadline for delivering four generators to the plaintiff. The evidence did not support the defendant's claim that the deadline had been set at large or pushed back to a reasonable time after the completion of PO 2. The plaintiff was entitled to terminate PO 1 on 24 April 2012 because, as at that date, the defendant's breach was such as to deprive the plaintiff of substantially the whole benefit which it was intended the plaintiff would obtain from the contract: at [45] to [48] , [51] , [55] and [56] .

(2) As compensation for the defendant's breach of PO 1, the plaintiff was entitled to recover the 20% of the contract price which it had paid to the defendant. This sum of money was a form of wasted expenditure incurred in reliance on the defendant's promise to carry out its work under PO 1 and reliance damages were available to make good that wasted expenditure. Having...

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2 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2013, December 2013
    • 1 December 2013
    ...of contractual obligations has been usefully summarised by the High Court in Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd[2013] 4 SLR 409 (‘Aero-Gate’). The court's judgment also examined the distinctions between the various ways by which a contract may be discharged (namely, throug......
  • Case Note
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    • Singapore Academy of Law Journal Nbr. 2017, December 2017
    • 1 December 2017 the contrary” was so “well established as to require no further affirmation”. 33 Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd [2013] 4 SLR 409 at [39]. 34KVC Rice Intertrade Co Ltd v Asian Mineral Resources Pte Ltd[2017] SGHC 32 at [54]. 35Pagnan SpA v Feed Products Ltd[1987] 2 L......

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